EOR 101 - Global EORs vs Local EORs

Top of mind

EOR (Employer of Record) 101

Most of my readers know what an EOR is. In fact, many of you are involved in the EOR space, whether as an employee of an EOR provider or as a company that uses EOR to expand your business globally 🌍. However, some of you may be new to this, so let me take a moment to explain what exactly we do here.

Let’s say a company based in the United States 🇺🇸 wants to engage talent in a country in which they did not have a local entity 🌎. Historically, they’ve had a two options:

1. Set up a foreign subsidiary - This option is a great choice if you want to invest heavily in that new market 💰. It not only takes a lot of time ⏳ and money 💵 to set up the foreign entity but also requires significant resources to manage it from a legal, tax, payroll, and HR perspective.

2. Call your talent a contractor - This is probably the quickest and easiest solution 🚀 but often the least compliant. Calling someone a contractor when they are not opens the company up to a lot of liability ⚠️.

There’s now a 3rd option:

Hire a 3rd party - This is where EOR comes into play 🌟. An EOR company acts as the employing entity for the employee and effectively leases the employee back to the company that wants to engage them. The employee is managed by the company from a day-to-day perspective while the EOR handles all the compliance, HR, tax, payroll, legal, and benefits aspects of employment. Want to onboard? The EOR drafts the contract ✍️. Want to terminate the employment relationship? The EOR manages that process 🚪. Want to give the employee a raise? The company determines the new salary 💸 and informs the EOR to implement accordingly.

So now you know what an EOR is. How do you find one? There are hundreds of EORs out there, and we can split them into two categories:

• Local EORs - These companies have been around for decades. They focus on delivering EOR services to companies looking to hire in a specific country or region 🌐. They specialize in that market and typically don’t expand their scope beyond that country or region.

• Global EORs - This is a more recent phenomenon in which certain EORs aim to deliver their services in 150-180+ countries 🌍. Global EORs include the following companies:

  • Deel

  • Velocity Global

  • Remote

  • Papaya Global

  • Globalization Partners

  • Remofirst

  • Multiplier

The question now, is what’s best for you?

I really think it depends. If your need is one off by nature, I’d say finding the most compliant and experienced local EOR is the way to go. However, if hiring globally is a critical part of your talent strategy, working with a global EOR is more beneficial. Your EOR should be your partner in global growth and should be able to meet your needs no matter what they are.

News

Skuad Acquisition

Last week it was announced that Payoneer is acquiring Global EOR, Skuad for $61M in cash. Skuad last raised a round of funding October of 2022 when they raised a $15M series A.

Skuad provides EOR, Global Payroll, and Contractor Pay services in 160+ countries. Their EOR pricing starts at 199 per month per employee per month in some countries and goes up to 599 per month per employee in other countries. They deliver their service through their own entities in addition to leveraging in country partners. I plan to cover this in a future issue, but I think it’s fair to assume that most Global EOR providers leverage some mix of owned entities and partners.

Singapore based Skuad was founded in 2019 by Sundeep Sahi is focused on the SMB market.

In a note on the transaction, Payonner says “the acquisition accelerates Payoneer’s strategy to deliver a comprehensive and integrated financial stack for SMBs that operate internationally”.

I believe this transaction is the first of its kind in which a publicly traded company on the NASDAQ has purchased an EOR company. Although this is the first, I think this is only the beginning of what we may see as the EOR industry consolidates.

Earlier this year, CB Insights made a prediction that Globalization Partners, Papaya Global, and Remote would merge. Raz Chorev, CEO of CWS Israel, posted on Linkedin about this earlier this year too. See below for more info on CWS Israel.

Other News

• Remofirst snags key exec, Masha Sutherlin, from Deel

• Helios achieves ISO 27001 certification

Solution Spotlight

CWS Israel

• Type - Local EOR

• Number of countries supported - 1 (Israel)

• Owned entities - Owned

• Support - Unknown

• Services - AOR (Agent of Record) & EOR

• EOR pricing - $599 USD/month or 9.5% of compensation depending on package

• AOR pricing - Unknown

• G2 presence - N/A

Thanks for reading.

Speak soon,

Moshe